Monday, July 07, 2008

DiNatale's Gas Price Craziness

Apparently the aforementioned commenter was annoyed with its dumbassery and was looking for someone to debunk it in a calm and rational manner. Which is of course what I'm known for. Polite political discourse.

For years voters have heard from federal politicians that the United States needs to relinquish its dependence on foreign oil. According to the U.S. Department of Energy, Canada supplies America with the most oil per day at 1.7 million barrels, followed by Saudi Arabia, Mexico, Nigeria and Venezuela. It is also a fact that the United States will spend approximately $400 billion in crude oil imports for 2008, and this number will continue to rise if Congress continues its failure to act on behalf of the American people. There are three solutions to alleviate this pain at the pump: Allow American oil companies to drill, build refineries, and encourage nuclear power development.

I did go over two of these "solutions" in the Bech post, but let me reiterate the points here.

Drilling is not only potentially environmentally disastrous, but there's little indication that it would make much difference. We're talking about a 1.8 cent decrease in price per gallon in 2025. Not exactly earth shattering stuff.

As for refineries, there's little incentive to build new ones since their profit margins are traditionally tiny and they're a huge pain in the ass. Anyway, there's unlikely to be any benefit there for a solid decade. Plus it probably makes more sense to continue what the industry has already been doing for the last few decades and decreasing the number of small refineries while expanding and improving the efficiency of the big ones. This is why our capacity for refining has increased while the actual number of refineries has decreased since the last one was built in 1976.

I didn't address nuclear power before, because Bech didn't talk about it. So let's get that out of the way too. Nuclear plants are ridiculously expensive to build (for good reason), but the actual power output is largely on the same cost level with coal plants, both of which are considerably cheaper fuels than oil and natural gas.

It's actually a little odd that DiNatale mentions nuclear power, since that's really only a factor in the production of electricity and has little impact on gas prices (to Bech's credit, that's probably why he didn't mention it). The US doesn't use a significant amount of oil in electricity production, so even if all those plants swapped to nuclear we're not talking about any significant change in gasoline price, which was supposedly the topic at hand. (There is a debate to be had about nuclear power, but it doesn't involve gas prices.)

Bascially, all of DiNatale's "solutions" for high gas prices will in reality have little or nothing to do with the actual price of gas.

But that's far from the end of DiNatale's editorial. Indeed, that was just the opening. He goes on to bash "Liberal politicians" and "fear mongering... environmental special-interest groups" in what I can only assume is an attempt to ingratiate himself to local Republicans.

DiNatale appears especially eager to drill in ANWR, and wants to make us all feel good about it!

One specific area of contention for drilling is the Artic National Wildlife Refuge in Alaska. According to anwr.org, 75 percent of Alaskans favor exploration and production, and only 8 percent of ANWR would be considered for exploration (2,000 acres of over 1.5 million acres of the Coastal Plain).

Let's take that apart, shall we?

First of all, anwr.org is a propaganda site created by a group called "Arctic Power." Arctic Power was formed by oil companies. Specifically, BP, ConocoPhillips, ExxonMobil, and ChevronTexaco. All but ExxonMobil have dropped out recently. I guess Exxon just figured nobody would notice the incredibly huge fucking conflict of interest.

The real site for ANWR is here. Not as pretty a website, but then again it's not funded by oil company money.

Now, you may think that maybe Marcus DiNatale was just pulled in by the slick propaganda put out by an oil conglomerate and are willing to cut him some slack. As we'll see later, it really doesn't matter, because even if he knew oil companies were behind the site he seems to have more faith in their truthiness than any sane human being should have.

Second, it really doesn't matter one bit if 75% of Alaskans support drilling in ANWR. Even if the number is accurate, it's a fallacious appeal to popularity, and doesn't mean that what they support is right. By way of example, if 75% of Alaskans supported clubbing baby seals, that doesn't mean we should all support clubbing baby seals.

As for the 2,000 acres figure; that doesn't sound so bad in such a large area, does it? It sure sounded good in Prudhoe Bay, where they claimed only 2,100 acres would be affected back in 1972. Too bad that's now expanded to a total drilling footprint of 12,000 acres with drill sites spreading over 640,000 acres. You have to be pretty gullible to think this time we'd really keep things down to just 2,000 acres.

DiNatale goes on to try to convince us even the animals want us to drill in ANWR:

Environmentalist groups say that wildlife would be in danger as a result of oil exploration in ANWR. However, the small amount of oil and gas development going on currently in ANWR coexists successfully with wildlife. The Central Artic Caribou Herd has grown from 3,000 animals to its current level of 32,000. Brown bear, fox and bird populations have also not been impacted negatively.

Yay, wildlife loves oil exploration!

Indeed, the Central Arctic Caribou Herd has grown (though the figures I've seen placed it at 5,000 before, not 3,000). Too bad we're dealing with the Porcupine Herd. I wonder what more informed people say...

Although the same animals, the two herds are very different. The Porcupine herd migrates over a much larger range, an arduous journey that takes its toll on the herd. Scientists also believe the Central Artic herd, a much smaller herd, has access to several acceptable calving grounds. The Porcupine herd has fewer alternatives and the herd has suffered declines in years when deep snow cover made it difficult to reach its preferred calving grounds on Alaska's coastal plain.

Some biologists suggest a major reason why the Central Arctic herd has flourished is because as much as three-quarters of the area where it calves has virtually no oil activity.

"Yes, the herd has grown, but only 25 percent has been affected," said Griffith, an associate research professor at the University of Alaska at Fairbanks. "The fact that it has grown does not mean there is no effect. It means that the effect wasn't sufficient to keep it from growing at all."

Ground observations of the Central Arctic herd in the nearby Kuparuk oil fields have found that over time the caribou increasingly avoid areas of intense activity - especially during the sensitive calving period -- and shift into areas with fewer roads and pipelines.

Okay, so far DiNatale has presented what's basically John McCain's plan. Which is to say, one that will have negligible effects in the short-term and largely unknown (but not especially compelling) effects in the long-term.

It's not just McCain he parrots, though. Remember when I mentioned how he seems awfully eager to accept the oil companies' propaganda about all of this? It wasn't just presumption. He actually goes on to quote the president of Shell Oil!

Shell Oil President and CEO John Hofmeister stated, "In the United States, access to our own oil and gas resources has been limited for the last 30 years, prohibiting companies such as Shell from exploring and developing resources for the benefit of the American people. It is not a free market. According to the Department of the Interior, 62 percent of all on-shore federal lands are off-limits to oil and gas developments, with restrictions applying to 92 percent of all federal lands. The Argonne National Laboratory did a report in 2004 that identified 40 specific federal policy areas that halt, limit, delay, or restrict natural gas projects. The problem of access can be solved in this country by the same government that has prohibited it. Congress could have chosen to lift some or all of the current restrictions on exploration and production of oil and gas. Congress could provide national policy to reverse the persistent decline of domestically secure natural resource development. There is simply no way to keep up - let alone get ahead of demand - except by producing more oil and building more refining capacity."

Holy crud that's a long quote. He must trust Shell Oil just as much as he trusts ExxonMobil!

So, Mr. Oil mentions a report by the Argonne National Laboratory about natural gas projects. Umm... wait a second. Does your car run on natural gas? Mine doesn't. Are we still talking about gasoline prices? No? Okay, then let's not get into that.

But let's deal with the basic gist, summed up by Mr. DiNatale in his final sentence.

There is your answer to high gas prices. It is Congress restricting free market exploration, not "Big Oil."

Huh. That sentence seriously ended the editorial, and came immediately after that big quote from "Big Oil" itself. Trusting guy, that Marcus DiNatale.

Too bad for him that "Big Oil" has a tendency to not be totally honest.

We're going to ignore all the natural gas stuff, since we're dealing with gasoline prices. So the basic argument being made by "Big Oil"/DiNatale is that Congress is standing in the way by keeping us from drilling and making more refineries.

Well, Congress has so far been successful in preventing ANWR drilling, but as we've already discussed, that's pretty much unrelated to gasoline prices. As for refineries, the reason there haven't been any built since 1976 has less to do with Congress than it does with lack of investors in a tumultuous and low-profit-margin industry.

What are we left with?

Well, personally I'm left with the opinion that Marcus DiNatale is for some reason trying to appeal to the conservative dumbasses who think we can get cheap gasoline prices next week if we just rape the environment. I'm also left with the opinion that he puts way too much trust in what oil companies tell him. Oh, and that his ideas about how to lower gas prices are idiotic.